News Corp., After Hiring Klein, Buys Technology Partner in a City Schools Project

Greg Gunn and Larry Berger met as Rhodes scholars at Oxford University and, after stints teaching computer skills and mathematics to children in Harlem and Stamford, Conn., they came upon an idea: create a business that would put technology in the hands of teachers and into classrooms.

Mr. Gunn, 40, and Mr. Berger, 42, founded Wireless Generation 10 years ago, and the company has since grown from a start-up with a bare-bones budget and staff to a national leader in a new wave of education reform, where data is a crucial tool to transform failing schools.

On Monday, News Corporationannounced that it had signed an agreement to buy 90 percent of Wireless Generation for $360 million in cash, its first foray into the for-profit world of education since its book publishing arm, Harper Collins, got out of the textbook business in the mid-1990s. The deal thrusts one of the world’s largest media conglomerates behind a concept championed by New York City’s schools chancellor, Joel I. Klein: a numbers-based system to evaluate and rank schools and to improve teaching.

The announcement was all the more interesting because just two weeks ago, Mr. Klein said he would leave the chancellor’s job at the end of the year to become an executive vice president with News Corporation, charged with pursuing business opportunities in the education marketplace.

Wireless Generation, whose headquarters are in the Dumbo section of Brooklyn, is the city Education Department’s leading partner in School of One, a pilot program that tracks student progress and tailors individual lesson plans based on the results — an approach that Mr. Klein said allowed learning “in a way no classroom can.”

Josh Reibel, president and chief operating officer of Wireless Generation, would not disclose how the company and News Corporation came together. Teri Everett, a spokeswoman for News Corporation, said that the transaction had been in the works for several months and that Mr. Klein “had no involvement” in it.

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Chancellor Joel I. Klein is also going to News Corporation.Credit
Marilynn K. Yee/The New York Times

Conflict-of-interest rules set strict limits for city employees, both during and after their tenure, which could make Mr. Klein’s transition a tricky one. City employees are never allowed to disclose confidential information about the city’s business dealings or future strategy, and they cannot communicate with the agency for which they worked for one year after they leave. The rules also bar them from ever working on matters they had substantial involvement in as city employees.

A spokeswoman for the Education Department, Natalie Ravitz, said that Mr. Klein recused himself from all business dealings between the department and Wireless Generation “as soon as we learned that News Corp had acquired” Wireless Generation. He will also “continue to follow the advice of the conflicts board on this matter” and abide by all applicable rules once he starts work at News Corporation, Ms. Ravitz said.

The mayor’s office is currently seeking state approval for Cathleen P. Black to succeed Mr. Klein.

Gene Russianoff, a spokesman for the New York Public Interest Research Group, a good-government organization, said that potential conflicts sometimes came up “because people do what they know best” once they leave their city jobs.

But he added, “Respecting the post-employment restrictions is important and it goes to the heart of the public concern that there’s a revolving door between government and the private sector.”

Wireless Generation has a contract with the city for $7.5 million, expiring in May, and, according to the city comptroller’s office, has received roughly $1.1 million in payments since Jan. 1.

Mr. Reibel would not discuss the finances of the company. The sale is expected to be completed before the end of the year. Wireless Generation employs 400 people and also has offices in Atlanta, Dallas and Washington.

The company received about $500,000 to prepare New Jersey’s application for a $400 million federal education grant, which the state lost during the summer because of a clerical error. Some legislators have blamed Wireless Generation for not catching the error, and have asked the company to return its fee.

Tim Arango contributed reporting.

A version of this article appears in print on November 24, 2010, on page A22 of the New York edition with the headline: News Corp., After Hiring Klein, Buys Technology Partner in a City Schools Project. Order Reprints|Today's Paper|Subscribe